Rolling Meadows Bankruptcy Attorney On Discharging Student Loans

Rolling Meadows bankruptcy attorney states that school loans are not eliminated in a Chapter 7 bankruptcy case as they are generally non-dischargeable debts.  They are also debts for educational purposes that are not student loans that are also held to be non-dischargeable.  What this means is that debt is going to survive the bankruptcy.  Now, it’s still a great idea for someone who is struggling with a ton of credit card debt, medical bills, personal loans as well as student loans to file for Chapter 7 bankruptcy so that at least some of the debt or most of the debt can be eliminated.  If you are able to eliminate the majority of your debt, you then have the ability to work out a payment plan or somehow repay your student loan over time. 

Now, there is one exception to this non-discharge ability of student loans and that’s for an extreme hardship case.  In my opinion, discharging a student loan is probably the most difficult thing to do under the Bankruptcy Code.  There are many requirements or hurdles that you must get over to win in court on this.  And most importantly, you must have the inability to repay the debt and it must be causing an extreme hardship on either you or your family.  In many cases, the person has the hardship before they took out the student loan so you can’t prove that all of a sudden you don’t have the ability to repay it.  

An exception once again would be if someone has taken out a student loan, gone to school and then subsequent to school, comes across some kind of medical situation or work situation where they absolutely do not have the ability to repay the loan and they have made efforts to do so.  In that case, your attorney may wish to bring an adversarial complaint trying to hold that student loan dischargeable.  I have not successfully brought a student loan discharge ability action because I haven’t had fact patterns that would justify bringing a case. 

If you feel that you have a case where an undue hardship has existed and you do not have the ability to repay your student loan, then talk to your attorney about possibly bringing that adversary.  Note however that that adversary is going to be a traditional lawsuit inside the bankruptcy case which is much more difficult than the underlying bankruptcy case itself.  Thus, your attorney is probably going to want a significant amount of money to try and bring that action. 

Be aware of the case law which shows that very few or a small percentage of cases are successful in bringing adversaries against student loans.  So go with the flow and unless you have a very strong case, plan on having to repay that student loan or at least the obligation to repay that student loan after your Chapter 7 bankruptcy case is completed.